SSA could take over APL Terminal in Oakland

Thursday, January 03, 2013

The Port of Oakland is in discussions with SSA Marine about the stevedoring company possibly taking over APL's Global Gateway Central Terminal (GGCT), berths 60-63.
APL, the largest container carrier in Oakland, said last month it will move its operations in Oakland from GGCT to the adjacent Oakland International Container Terminal (OICT), berths 57-59, which is already operated by SSA Marine. OICT is the busiest terminal in the port with about 15 carriers using the facility. Among the carriers calling OICT are China Shipping, CMA CGM, COSCO, Hapag-Lloyd, Maersk, MSC, NYK, OOCL, and Zim.
APL said the move will be done this summer to accommodate larger ships that it may put into the transpacific trade.
Lawrence Dunnigan, manager of business development and international marketing in the Port of Oakland, said APL went through a bidding process and selected SSA as the candidate to take over its lease.
He noted while most of the port's terminals can accommodate ships drawing 50 feet of water, APL's GGCT and the nearby Howard Terminal, which is used by Matson, have a draft limitation of 42 feet. They, like OICT and the Hanjin/TTI Terminal, are located on the Oakland Estuary/Harbor Channel that separates Oakland from Alameda, but because OICT and Hanjin/TTI are at the western end of the channel, they have deeper water.
The Port of Oakland has planned for a number of years to bring the APL terminal to 50 feet of depth, but Dunnigan said there are structural issues with the wharf that would require expenditure of about $130 million to replace.
With other projects at the port requiring funds, Oakland had been in discussions to see if APL might make improvements in exchange for a longer term lease. But APL told the port it could not justify the expense at this time, Dunnigan said, and decided in favor of relocating to SSA's OICT. No deal has been struck by SSA and the port, but Dunnigan said there could be an "elegant solution" if SSA took over the APL terminal and ran the combined terminals as a single facility.
The Port of Oakland is in discussions with APL and SSA about what the terms and conditions would look like if SSA takes over the APL lease.
Dunnigan said larger ships are expected to become more common in the transpacific trade and at Oakland in coming years. "We are expecting to see our average vessel size inch up. We are starting to see more 8,000-9,000 TEU vessels," where today 6,000 TEU vessels are more common. Mediterranean Shipping Co. has brought the 12,562-TEU Fabiola and the 14,000-TEU Beatrice to the port.
But at the same time, Dunnigan observed, "You do not need 50 feet of water depth at all times for all vessels." Smaller ships could use the former APL terminal, while ships needing deeper water could continue to be worked at OICT.
OICT and GGCT could be connected by simply taking down a fence, though Dunnigan said the gantry cranes could not, at least immediately, roll back and forth between the two facilities because the crane rails don't match up.
If SSA ran the two terminals as a single facility, "you may not have to invest in that wharf and deep water for a long time to come," Dunnigan said.
On the other hand, if the port had to market the APL Global Gateway Terminal as a stand-alone operation, the lack of deep water would be a much greater issue, he said.
The port hopes to work out a deal with SSA before APL relocates to OICT in July.
Discussions between the port and SSA are being held while they are simultaneously involved in a dispute before the U.S. Federal Maritime Commission.
SSA charges Oakland gave preference when it granted a concession to competitor, Ports America, and prejudiced SSA. While Oakland sought sovereign immunity from the SSA's complaint, the FMC decided last year the case could proceed.
According to calculations in SSA's ammended complaint filed in June, the 2010 rent for the Ports America Outer Harbor Terminal and assignment of two adjacent berths amounts to $148,249 per acre while SSA's per acre charge was $268,765.
Neither the port nor SSA would discuss the complaint before the FMC. - Chris Dupin